Cadiz, Inc. (CDZI) - Description of business

” below. Our
initial focus was on the acquisition of land, the assembly of contiguous land
holdings through property exchanges and to prove the quantity and quality of
water resources through well drilling programs. We subsequently established
agricultural operations on the properties in the Cadiz and Fenner Valleys and
sought to develop the water resources underlying that site. The
focus
of our water development activities has been the Cadiz Project. The Metropolitan
Board’s decision in late 2002 delayed implementation of the Cadiz Project as we
sought a settlement with Metropolitan before proceeding with another state
agency. When it became clear that we would not be able to reach settlement
and
continue the Project with Metropolitan, we began to take steps to complete
the
environmental review process and implement the Project independently. To that
end, in 2006 we began work with San Bernardino County to complete the CEQA
environmental review for the Project. In the Fall of 2006, the County agreed
to
serve as the CEQA lead agency in the review of the Project’s existing and
updated environmental documents. At
the
same time we have pursued a claim against Metropolitan, seeking compensatory
damages for what we believe is a breach of contractual and fiduciary obligations
to us and interference with the economic advantage we would have obtained from
the Cadiz Project. We filed a claim against Metropolitan in April 2003 and,
when
settlement negotiations failed to produce a resolution, filed a lawsuit in
Los
Angeles Superior Court in November 2005. Our claims for breach
of
fiduciary duty, breach of express contract, promissory estoppel, breach of
implied contract and specific performance will all go forward to trial, which
is
currently scheduled for later this year. In
2006,
we refinanced our long term debt with a new $36.4 million zero coupon senior
secured convertible term loan that matures on June 29, 2011 and received $1.1
million when certain holders of warrants issued in 2004 exercised their right
to
purchase 70,000 common shares at $15.00 per share. In 2007, we exercised our
right to terminate the remaining warrants on March 2, 2007, subject to a 30
day
notice period. In response, the remaining warrant holders exercised their right
to purchase 335,440 shares of our common stock during the notice period, and
we
received an additional $5.0 million from the sale of these shares. Following
this exercise, no warrants remain outstanding. These transactions are described
in more detail inItem
7,
“Management’s Discussion and Analysis of Financial Condition and Results of
Operation.” The
Chapter 11 Reorganization Plan of our Sun World International Inc. subsidiary
became effective in 2005, and the Company has no further liabilities related
to
the business or operations of Sun World. (b) Financial
Information about Industry Segments The
primary business of the Company is to acquire and develop land and water
resources. Our agricultural operations are confined to limited farming
activities at the Cadiz Valley property. As a result, the Company’s financial
results are reported in a single segment. See Consolidated Financial Statements.
See also Item 7, “Management’s Discussion and Analysis of Financial Condition
and Results of Operations”. (c) Narrative
Description of Business Our
business strategy is the development of our land holdings for their highest
and
best uses. At present, our development activities are focused on water resource
and real estate development at our San Bernardino County
properties. W ater
Resource Development Our
portfolio of water resources, located in proximity to the Colorado River and
the
Colorado River Aqueduct, the principal source of imported water for Southern
California, provides us with the opportunity to participate in a variety of
water storage and supply programs, exchanges and conservation programs with
public agencies and other partners. The
Cadiz Valley Aquifer Storage Project The
Company owns approximately 35,000 acres of land and related high-quality
groundwater resources in the Cadiz and Fenner valleys of eastern San Bernardino
County. The aquifer system underlying this property is naturally recharged
by
precipitation (both rain and snow) within a watershed of approximately 1,300
square miles. See